SEC's Crypto Battle: Gensler's Strict Rules vs. Atkins' Light-Touch Reforms

Gary Gensler, the former chair of the U.S. Securities and Exchange Commission (SEC), has reiterated his firm stance on regulating the cryptocurrency industry, emphasizing its speculative nature and the prevalence of fraud. During a recent interview with CNBC, Gensler defended the SEC’s aggressive enforcement actions against crypto firms during his tenure from 2021 to 2025, stating, “We were consistently trying to ensure investor protection. And in the midst of it, we had a lot of fraudsters—look at Sam Bankman-Fried, and he wasn’t alone.” Under his leadership, the SEC filed approximately 100 enforcement actions against crypto companies, with 18% of all cases tied to the sector. Gensler classified most tokens as securities, subjecting them to stringent compliance requirements, a move criticized by industry leaders as stifling innovation and clarity.

The former SEC chair’s approach, often labeled “regulation by enforcement,” included high-profile lawsuits against exchanges like Binance and Coinbase, as well as actions against individuals such as Kim Kardashian for unregistered crypto promotions. Critics argue this strategy created regulatory uncertainty, with 18 state attorneys general filing a lawsuit accusing the SEC of unconstitutional overreach. Gensler, however, maintained that his actions were necessary to protect investors, noting that “most tokens trade on momentum and hype,” with “very little fundamentals” beyond Bitcoin. His departure on January 20, 2025, coincided with the inauguration of President Donald Trump, who had previously criticized Gensler as a “rogue agency” leader.

The SEC’s regulatory landscape is undergoing a significant shift under Trump’s appointee, Paul Atkins, a former commissioner known for advocating lighter-touch oversight. Atkins, who has been vocal about streamlining crypto regulations, recently approved expedited rules for crypto ETF listings, allowing qualifying funds to be approved in 75 days or fewer. This marks a departure from Gensler’s approach, which delayed approvals for assets like Solana and XRP. The new leadership has also signaled openness to revisiting quarterly reporting requirements, with Atkins stating the market should “decide the proper cadence” for transparency. These changes have been welcomed by crypto firms, including Ripple and Gemini, which view them as fostering innovation.

Gensler’s final public remarks before leaving the SEC underscored his skepticism of the industry’s long-term viability, stating, “Of these 10,000 to 15,000 projects, many of them will not survive. They’re like venture capital investments. They’re not going to survive.” He also dismissed concerns about the sector’s volatility, arguing that its limited appeal—less than 10% of the public invests in crypto—reduces systemic risks. However, industry advocates counter that Gensler’s enforcement-heavy strategy hindered growth, with companies like Crypto.com and Robinhood filing lawsuits to challenge the SEC’s jurisdiction over digital assets.

As the SEC transitions to a more crypto-friendly framework, the focus now shifts to balancing investor protection with innovation. Atkins has pledged to prioritize regulatory clarity over aggressive enforcement, a shift that could accelerate the approval of crypto ETFs and staking products. While Gensler’s legacy includes landmark actions against fraud, the new leadership’s emphasis on flexibility may redefine the industry’s trajectory. For now, the crypto sector watches closely as the regulatory pendulum swings, with market reactions to these changes already reflected in Bitcoin’s record highs and renewed institutional interest.